Mending the wage-setting system

Korea’s minimum wage has been set at 6,470 won ($5.70) per hour for next year, up 7.3 percent from this year. The decision was made by the Minimum Wage Commission, comprised of nine representatives from the government, employers, and employees, under the auspices of the Ministry of Employment and Labor without the presence of a member representing workers. Two from the employers’ side — small businesses — boycotted the meeting.

As a result, the final proposal for next year’s wage hike was approved by the minimum number of attendees. The decision that the employer representatives threw their votes of approval was later denounced by the employers’ community. The Korea Employers’ Federation issued a statement immediately claiming that the 7.3 percent hike would aggravate woes for small and mid-sized companies amid economic slowdown.

How can the minimum wage have any justice when it has been decided through such a wobbly process? Many workplaces do not respect the minimum pay for part-time workers. Such an imperfect wage that was passed on such a fragile consensus cannot be expected to have any force in workplaces. The commission failed to achieve its given role. Labor and management sides mostly wasted the meeting sessions growling at each other.

Time has come to revise the wage-setting system. Korea should pay heed to the recommendations from the Organization for Economic Cooperation and Development to set minimum wage differently — in accordance with economic data and income levels instead of leaving it up to labor and management representatives. Our wage system must look beyond the minimum figure to instead focus more on enhancing welfare and social security for the low-income class.

The commission should work with broader labor and management to study reasonable ways to improve the overall wage system. It should be free from the vice-ministerial level status and instead work as a policy advisory committee to pool opinions and propose the best possible income distribution policy. The committee must be able to contribute to improving labor-management relations, not worsening them.

JoongAng Ilbo, July 18, Page 30